Alere Accused of Running Urine-Testing Fraud Schemes

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By Eric Topor

Abbott Laboratories purchased a fraud lawsuit when it acquired diagnostic testing company Alere Inc. on Oct. 3 for $8.3 billion, according to a recently unsealed lawsuit ( United States ex rel. Nolan v. Alere, Inc., M.D. Fla., No. 15-cv-404, unsealed 10/5/17 ).

Two former Alere employees accused the company of running several schemes designed to boost Medicare, Medicaid, and TRICARE (military health) reimbursements for urine drug screening tests. The whistle-blowers—former vice president Michael Nolan and former regional sales director Jacob Whitfield—said Alere and its subsidiary Avee pushed physicians to bill for medically unnecessary confirmation drug tests and overly broad drug screening panels, and paid physicians kickbacks to induce unnecessary testing.

The Department of Justice declined to intervene in the action, which was filed in March 2015 and unsealed Oct. 5, but urine drug testing fraud has been a focus of health-care fraud enforcement in recent years. Medical testing company Millennium Health paid $256 million in October 2015 under three settlement agreements resolving eight False Claims Act lawsuits alleging the company billed Medicare, Medicaid, and other federal health-care programs for unnecessary urine and genetic tests.

Abbott didn’t respond to requests for comment on the allegations. Counsel for the whistle-blowers also didn’t respond to Bloomberg BNA’s request for comment. The court unsealed the lawsuit after the DOJ declined to intervene in the litigation.

Unnecessary Testing, Discounted Equipment

The whistle-blowers said Alere published marketing materials and offered other inducements to encourage providers to perform “confirmation” tests of negative urine drug analysis that weren’t medically necessary. According to Nolan and Whitfield, confirmation testing is only reimbursable by federal health-care programs when a provider has reason to believe the first urine drug screen wasn’t accurate.

Alere encouraged providers to confirm all negative drug screening tests, the whistle-blowers alleged, through prepared forms drafted by Alere employees that pre-filled testing orders and billing codes, resulting in false claims. Alere also allegedly encouraged the use of certain diagnosis codes by providers that would pay the highest reimbursements, regardless of what diagnosis codes were applicable to a patient’s test screening.

The whistle-blowers said Alere used free or discounted drug testing devices worth approximately $40,000 (the EasyRA Analyzer, made by Global Analytical) provided to physicians as a kickback to induce unnecessary drug screening tests. Additional kickbacks included free urine testing strips and cups, conference fees, sham speaker fees, travel and other entertainment expenses, according to the whistle-blowers.

Farmer, Jaffe, Weissing, Edwards, Fistos & Lehrman PL represent the whistle-blowers.

To contact the reporter on this story: Eric Topor in Washington at etopor@bna.com

To contact the editor responsible for this story: Peyton Sturges at psturges@bna.com

For More Information

The complaint is at http://src.bna.com/teQ.

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